FINANCIAL INSTITUTIONS are boosting their capabilities to ensure they can accommodate the needs of consumers and merchants in their shift to digital payments amid the coronavirus pandemic.

While systems put in place by regulators and financial players to facilitate digital transactions have helped, there is still a lot to work on as Filipinos embrace digital transactions, stakeholders said at the BusinessWorld Virtual Economic Forum last week.

“One-third of digital buyers during the pandemic are first- time users. More than half of them are in non-Metro areas. 95% of them plan to continue using it even beyond the pandemic,” Mamerto E. Tangonan, digital payments expert, said at the forum on Thursday.

At first, the “radical shift” was only done out of necessity to survive and thrive given the restriction measures during the lockdown, said Paolo Azzola, chief operating officer at PayMaya Philippines, Inc.

He said government initiatives also drove the rise in e-payments, such as state subsidy programs and the use of online payments for government transactions.

“Consumers opened e-wallet accounts at an unprecedented pace. MSMEs (micro, small and medium enterprises) are among the hardest hit, and to survive, many went online, through social media, messaging apps, e-commerce, and building their own sites and apps,” he said.

Martha M. Sazon, president and chief executive officer of Mynt, the operator of GCash, said the emergence of digital payments during the lockdown paved the way for the rise of “social sellers” apart from merchant sellers that tap online financial services in doing business.

“People are starting as consumers… and later on, they slowly evolve into becoming a full-fledged business owner in our system,” Ms. Sazon said.

Bangko Sentral ng Pilipinas (BSP) data showed 4.1 million digital accounts were opened in bank accounts and nonbank electronic money issuers during the lockdown.

PESONet, the electronic fund transfer service under the National Retail Payment System that facilitates batch transactions credited by the end of a banking day, saw transaction volumes surge by 264% year on year as of September. InstaPay, its retail counterpart which allows real-time fund transfers for transactions less than P50,000, also saw transactions grow by 758% to 30.3 million from 3.5 million.

People’s familiarity with smartphones also allowed for their gradual shift to e-payments, Ms. Sazon said.

“You don’t have to learn another skill set because you are so familiar with telco… All you need is a cellphone and internet, and you can transact,” she said.

However, BDO Capital & Investment Corp. President Eduardo V. Francisco said many of their customers appear to be more of “digital adopters” than “digital natives.”

“We have a lot of clients who still want to go to the branch managers even if they are in face masks… [They are] not comfortable with cellphones,” Mr. Francisco said.

He said the virus outbreak has accelerated “forced digitalization” for some consumers, saying only 15% of their roughly 12 million bank clients had e-banking accounts prior to the pandemic.

This has risen to about 40% of the total customer base to date, he said. These clients do not only use their online banking facility to check their balances but to make transactions as well.

For service providers, the pandemic also stress-tested lenders’ capabilities to operate despite restriction measures, said ING Bank N.V. Manila Country Manager Hans B. Sicat.

“One thing we learned is that we can keep the bank running 24/7 literally from home. We haven’t really had the need to go to the office as part of the operations,” Mr. Sicat said.

He added that service providers should boost security measures to “ensure trust in the system is on the highest level” as e-payments gain traction.

Moving forward, stakeholders said there is still much to be done for the industry to make digital financial transactions more efficient.

Mr. Tangonan said there is a need to expand electronic payment infrastructures to also include other case points such as bills payment and account-to-account payments for digital commerce.

He said players should also target to expand their services to unserved and underserved market segments.

“We need to bridge those customers who are still using cash… and one way of doing that is giving them access points even in non-Metro areas where they can exchange or deposit their cash into their accounts,” Mr. Tangonan said.

GCash’s Ms. Sazon said the national ID system could help them in reaching more Filipinos as the Know-Your-Customer process remains a challenge in onboarding new clients.

“More transactions will spur the economy and of course we’re all for that,” ING’s Mr. Sicat said.

The BSP targets to have 70% of Filipino adults already owning a formal account with financial institutions by 2023. As of 2019, only 29% of adults are financially included, leaving 51.2 million still unbanked.

A study by the Better Than Cash Alliance found the volume of e-payments in the country made up 10% of the total transactions in 2018 from just 1% in 2013. By value, e-payments comprised 20% of the total in 2018, also growing from the 8% seen in 2013.

The BSP wants e-payments to make up 50% of total transactions in the country both in volume and value by 2023. — Luz Wendy T. Noble